X-posted from my journal.. As I was saying the major villains in the HP series thus far can be roughly categorized as :
1. The unsuspected, innocent-looking ones
Professor Quirrel, Tom Riddle, Peter Pettigrew, and Fake!Moody.
2. The never-been-seen-as-nice, but worse than they appeared ones
Gilderoy Lockhart, Rita Skeeter, Lucius Malfoy, and Dolores Umbridge.
3. The obviously bad ones
Voldermort, Bellatrix Black and some other DEs who debuted in the graveyard scene.
4. The complex, semi-good ones
So far, only Severus Snape is for sure under this category.
5. The obviously bad, but in a relatively minor way ones
The Dursleys (though I’m not completely sure about Dudley and Petunia), Pansy, Crabbe, Goyle, and bunch of other Slytherin students.
I think Draco is equally likely to end the series being 2, 4 or 5.
Thus far in the story Draco seems to serve a function that is roughly the Dudley equivalent in WW-- while their backgrounds and personalities differ significantly in certain ways, they are basically there to make Harry's life hell (at least try to), and both are the sole offspring of a couple that represents 'bigotry' in their respective society. It has been said that if Draco was merely set up as a "necessary" obstacle that Harry has to overcome in school, then he hasn't been very effective at all-- unlike Dudley who had indeed been giving Harry hell up until Harry's 11th birthday, Draco hadn't been very successful with his attempts to get Harry in trouble. Well, Draco doesn't have to be the single biggest thorn in Harry's back, it makes perfect sense for he to have been intended as one of the more prominent secondary villains that collectively make sure Harry's school life won't be TOO easy.
Then there's also the argument that if Draco were meant to be just a big plot device (which will make him a type 5 villain as well), then much more than necessary page space had been devoted to him, so he can't be just that. This I partially agree with.. While I do think most of Draco's more prominent scenes *did* all affect/advance later plots, and thus quantity-wise the page space used on Draco (as a pure plot device) were justified, quality-wise I think they were not. We know SO MUCH about Draco's personality, than all the type-5 villains *combined*-- and why were we allowed the extra info, if his purpose in the series was meant to be just like them? For example the bouncing ferret scene, why did he have to pick himself off the floor and looked defiantly up at fake!Moody? He could've just cowered in fear and wept or whatever, because the main 'purpose' of that scene was to show readers how strangely nasty fake!Moody was, who cares if the plot device/minor villain had a spine? And unlike Vernon who truly seems to have an emotional span of a spoon, Draco shows a different side of him in front of every character he had interacted with in canon.
Then we come to Draco as a type-2 villain, the sort who's significantly worse than how they had appeared early on in the books. Unlike Lucius, Umbridge and other type-2s who were like an enigma that became clear as the story progressed (bigot!Lucius who tried to kill Ginny and others with a diary, bitch!Umbridge who sent the dementor after Harry, liar!Lockhart who used memory charm on people that might severely damage them, nosy!Skeeter who had no qualm writing news articles with untrust-worthy information sources), a lot about Draco had been laid out in front of us. It's unlikely that Draco has a Really Evil Agenda™ hidden from us, so whether or not he'll "upgrade" himself to a worse level of bad than he had thus far been, mostly depends on if he has what it takes to be a ruthless baddie, like seriously hurting a person just because s/he is in Lucius' way. I think the odd is 50/50, as we've been given 'signs' to argue both way.
Lastly the type-4 villain category, which Snape is currently the sole incumbent. The thing with Snape is that we learn his story 'backwardly'-- starting from the 'end result' to his earlier stages, though not always in that order. But thus far, we still haven't been told what the "deciding factor" was for Snape to turn against Voldermort, so I can't direct compare Draco with Snape to see if he possesses the same quality that would make him decide against being/remaining on the Dark Side. Of course, Draco can have his own reason to become borderline "good", so far I can only think of two scenarios: 1. If he finds the "real business" Voldermort & gang engage in to be too horrid to stomach (but he can of cource choose to simply chicken out instead of work against Volde, which would render him the type-5 villain after all); or 2. If he realizes working on the Light Side would benefit himself and his parents. Ideally, he would receive "possive influence" from Snape and chooses not to join Voldermort for maybe a less selfish reason, but I can't quite see that, yet.